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Brexit and economic migration

Brexit and economic migration

Brexit and economic migration

Reflections on the future relationship between the UK/EEA and economic migration: A call to accept geographic and business realities.

Since its publication mid-September 2018, the final report of the UK Migration Advisory Committee (MAC) on the impact of EEA migration on the UK, in light of the approaching Brexit on 29 March 2019, has received mixed reactions.

People and migration have been at the heart of the Brexit saga since its genesis, so it should not surprise anyone that EEA migration remains a sensitive topic.

In this article, we reflect on certain topics raised in the MAC report through a lens of business related migration and our experience in this field.

The MAC starts out the report by stating if the immigration system is not part of the negotiations with the EU, and the UK develops its future migration scheme in isolation, it recommends moving to a system in which all migration is managed with no preferential access for EEA citizens. In fact the MAC drafts their report on the supposition of a “no deal” situation.

Recent developments on both sides of the Channel show some promise that – hopefully – a “no deal” scenario can be avoided. Whilst waiting for 11 December 2018, the date the UK Parliament votes on the proposed “May” Brexit deal, we call for a reconsideration of some of the recommendations made in the MAC report. In our view, focus should return to the alignment of the future relationship and its economic migration impact taking geographic and business realities into consideration, in whichever scenario Brexit eventually plays out.

End of the free-movement era?

MAC recommends, somewhat boldly, ending the current free movement of EEA nationals to the UK in a no-deal scenario. It is suggested that “free movement leaves the migration decision solely up to the migrants, leaving UK residents with no control over the level and mix of migration. With free movement there can be no guarantee that migration is in the interests and for the benefit of the UK residents.”

As a result, EU nationals would have to be considered third country nationals, having to comply with additional red tape (work or other visa when travelling, settling and working in the UK), increasing cost and slowing down the staffing of resources in/to the UK for businesses.

The business reality we experience is that employers actively pitch assignments or relocation ideas to their current or future employees in order to fill staffing gaps in the UK, develop talents within the company or respond to urgent business needs. Within a company context, a decision to employ EU nationals in the UK is seldom triggered by an individual’s personal wish to migrate to the UK.

We recommend reflecting on this and the negative economic effects the end of free movement will have on UK businesses and subsequently on UK residents.

Clear choice for high (and medium)-skilled workers

The report makes a strong distinction between high-skilled and lower-skilled workers. A clear preference is expressed for only attracting and allowing an inflow of highly skilled workers – not only from EEA countries but also from third countries. Higher-skilled workers tend to earn more, make a more positive contribution to the public finances, pay more taxes and receive fewer social benefits, the report summarizes. Hence, their presence in the UK is “justified”, according to the MAC report.

The report proposes that high-skilled EU-nationals should be granted work authorization in UK, using the existing scheme for high-skilled workers from outside the EEA and Switzerland, while, at the same time, simplifying the conditions of the existing scheme for all high-skilled migrants concerned.

A suggestion is to also extend the scheme to workers in medium-skilled jobs, in order to avoid a damaging skills shortage, which might occur should the free movement of workers end and access to the UK only be available to high-skilled workers. Furthermore, it is recommended abolishing the cap in the scheme and reducing the administrative burden for both EEA residents and non-EEA residents.

KPMG Belgium is convinced that the proposed changes are good for businesses that want to employ foreign resources from outside the EEA and Switzerland. Allowing a more flexible inflow of talent and skills into the UK is going to benefit companies in the war for talent. However, not giving preferential treatment to EU-nationals seems to ignore the geographic and cultural reality of the proximity of the EU and its talent pool, which can be fairly easily called upon. Business would benefit from the continuation of the current quick and easy – preferential – access to the talents and skills of EU-nationals, a second point to reflect upon.

And what about low-skilled talent?

Conversely, the MAC report does not see the need for a work-related visa scheme for lower-skilled workers, be it EU or third country nationals.

Somewhat shockingly, the report even refers to the current low-skilled EU-nationals in the UK as “existing stock” and assumes that the continued flow of lower-skilled workers would be guaranteed through family migration. This can be a reflection of public opinion about lower-skilled workers in line with the referendum vote to leave the EU. However, the reality is that many UK businesses are, pre-Brexit, already facing a shortage of staff for low-skilled jobs in various sectors such as hospitality, cleaning, construction, production, etc.

There is also an appeal to recognize the proximity of the EU and the easy access to the pool of EU-nationals, regardless of their skill level. Business and society, as a whole, would benefit from giving preferential treatment to low-skilled EU-nationals to enter the UK labor market, in addition to recognizing their important role in the economy.

With its recent call for evidence in order to draft a Shortage Occupation list for 2018, MAC seems to be taking a step in this direction. Businesses are encouraged to provide their input online to MAC before 6 January 2019.

Conclusion

Brexit has many facets; the economic migration aspect for businesses, being one of them. KPMG Belgium calls on the EU and the UK to shape their future relationship on this particular topic, taking into account business and geographic realities, allowing businesses to continue to hire UK and EU-nationals seamlessly from both sides of the Channel.

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